Budget 2017: No cuts to wine and spirit duty

08 March, 2017

The Chancellor Philip Hammond’s announcement that wine and spirit duty will rise by inflation is “disappointing” and a “missed opportunity”, according to the Wine & Spirit Trade Association (WSTA).

Miles Beale, chief executive of the WSTA, said: “It is disappointing that the Chancellor has failed to support a great British industry. He has increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses.

“Between Brexit’s impact on the pound and rising inflation the wine and spirit businesses face a tough trading landscape. This is a missed opportunity to back British business and help out struggling consumers.

“This added uncertainty of another Budget in six months’ time is unwelcome and will further undermine business – and consumer – confidence.”

The WSTA had been calling for the government to back the British wine trade, which it says generates £17.3bn in economic activity. The trade body had been calling on the Chancellor to cut wine and spirit duty by 2%, which it said would "benefit our industry, the consumer and boost Treasury coffers - just as it did two years ago."

The announcement by the Chancellor means duty increases (in line with inflation) across the BWS sector in the UK, which the WSTA has calculated as: an increase of 8p on a 75cl bottle of wine to £2.16 in duty; an extra 10p in duty on sparkling wine to £2.77; 11p on fortified to £2.89; 28p in duty on a 70cl bottle of vodka (to £7.54); 40p on a litre of vodka (to £10.78); 30p for gin (to £8.05) and 43p on a litre of gin to £11.50.

The government will also introduce a consultation on a new duty band for still wine and made wine between 5.5% and 8.5% abv. 

Also commenting on this issue, Charles Ireland, Managing Director, Diageo Great Britain, said: “Today’s tax blow from the Chancellor is bad for the economy, bad for business and bad for the British public. It is staggering that the Prime Minister stood up in Scotland only on Friday and said that Scotch Whisky is “a truly great Scottish and British industry… and directly supports tens of thousands of jobs”, and just five days later her Chancellor hammers this industry at home. Tax on Scotch Whisky is now so high – nearly 80% of the price of an average bottle will go straight to the Government. We believe this duty rate increase will reduce total tax revenue. We are calling on the Government to reverse this punitive tax hike and fundamentally overhaul what is clearly a flawed excise duty system.”

The Budget 2017: the Convenience sector:

Separately, but also in relation to today's Budget announcements, James Lowman, chief executive of the Association of Convenience Stores (ACS), said the £300m discretionary fund given to Local Authorities will provide “welcome relief” to the hardest hit.

He said: “We are committed to working with the Department for Communities and Local Government on the formula for allocating discretionary relief funding across local authorities. We will help members make their case for rate relief to their local authority. We are disappointed that there has been no targeted relief for petrol forecourts which are some of the hardest hit businesses as a result of the revaluation, but will support these stores in making a case to their local authorities for much needed help.”

In his Spring Budget 2017 speech today the Chancellor also announced there would be a consultation at a later date on the subject of business rates.

On this issue Lowman commented: “We along with our business groups have repeatedly called for a proper fundamental review of the rates system to ensure that everyone pays their fair share. Businesses like rural petrol stations and convenience stores with cash machines providing an essential service to their communities should not be paying over the odds while internet distribution warehouses enjoy a decrease in their rates bills. We are disappointed that the government is not addressing these issues now, meaning the current inequities in the system will remain.”

In addition, Lowman commented on the subject of the extension of the Making Tax Digital threshold to the VAT threshold of £83,000 per year, which he said “would not benefit convenience retailers”.

He explained: “Further support is needed from the government to support the smallest retailers make huge administrative changes to their business through investments in new hardware, software and in-store procedures to comply with the regulations.”




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